4 Earnings Reports to Watch Next Week
Damon is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Among companies releasing May-quarter earnings reports soon, several are industry behemoths with possibility of recovering and a couple in growth stages. An overview of analysts' forecasts and company prospects can provide insight into what to expect. Will profits exceed estimates? What will be in store for beyond the current quarter? Here's the breakdown:
FedEx might deliver a favorable forecast
A recent announcement regarding the International Priority airline fleet perked investor interest in the shipping giant. The move to cut the number of aircraft at an accelerated rate was not a big surprise given FedEx's (NYSE: FDX) current challenges.
Demand for International Express shipments has waned due to a market shift toward more affordable methods of cargo. The newest plan will be in tandem with a strategy of boosting yields and reducing costs. This factor, and its effect on profitability, was discussed in my March blog, where I also mentioned some fellow cargo transporters.
Acquisitions of foreign shippers have not been sufficient in offsetting the effect of the changing industry landscape. Other similar investments had supported FedEx's earnings over the last decade.
Analysts are estimating that earnings per share were about $1.97 in the quarter, roughly flat with the prior-year tally. The result may fluctuate on industrial production, as well as the direction of fuel prices. Most will probably be focusing on management's guidance and if the result represents the beginning of a turnaround. Regardless, I continue to see FedEx shares as a good long-term holding, as management is taking the right initiatives to position itself for the e-commerce environment.
Brighter days likely ahead
Jabil Circuit (NYSE: JBL) struggled last quarter due to softness in the renewable energy market as revenue from solar and wind manufacturers was pressured. Weakness in these categories was offset partially by strength in Diversified Manufacturing Services and Enterprise & Infrastructure operations. Jabil also operates a High Velocity Systems (HVS) segment that has struggled of late.
Electronics contractors' stocks, in general, have largely fared well in 2013, though, and Jabil may thus be poised for a turnaround. It boasts some notable customers among its top five, including Apple, Cisco, and BlackBerry. (see my December blog on the industry). A rebound in HVS revenue would help the recovery along.
The $0.54 a share Wall Street estimate would represent a $0.10 year-over-year decline and the midpoint of the company outlook; therefore a better-than-expected result may be on the cards. Jabil shares may be considered for its long-term appreciation potential, in light of company guidance for 5% to 10% annual share-net gains over the next few years.
Actuant ready to bounce back
If you are looking for a company on the cusp of a rebound, Actuant (NYSE: ATU) may fit the mold. Operating conditions likely bottomed in March, and Actuant is looking toward a better six-month span going forward. Investors have bought up the shares of late, leading up to the recent Electrical division sale announcement.
Actuant relies on its Industrial and Energy units for the bulk of profits. Global energy companies comprise much of its customer contingency, with industrial tools as its main product. Demand has picked up modestly across end markets and a more pronounced recovery might well be underway.
Given its recent history, it is unlikely Actuant will considerably exceed analyst estimates of $0.65 for the May quarter. However, interest will be placed upon the divestiture. The Electrical unit had been reporting slowing sales and limiting profitability. Divestitures are an activity that have been instrumental in allowing companies to divert resources to core operations, helping their fortunes over time. One example is NCR (see my December blog).
CLARCOR may surprise on filtration business momentum
CLARCOR (NYSE: CLC) produces engine and locomotive filtration systems, while also providing industrial and environmental filters. With those units poised for gains this year, more than mitigating a likely decline in packaging profits, CLARCOR's earnings will probably gain ground this year.
Stricter regulations regarding engine emissions could be a catalyst to earnings, along with overall increased macroeconomic activity and automobile sales. Analysts estimate per share earnings of $0.67 for the May quarter and $2.56 for the full year, as compared with $0.65 and $2.42, respectively, in the year-ago period. I recommend taking a wait-and-see approach with the shares until consistent growth is underway.
Investors should be aware of these out-of-season earnings reports in mid-June if they hold industrial or shipping stocks. Depending on the results, portfolio adjustments ought to be considered.
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Damon Churchwell has no position in any stocks mentioned. The Motley Fool recommends FedEx. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!